The pace at which Sun Auto Tire & Service has been acquiring tire dealerships and auto service chains “has been pretty rapid,” says Chris Garman, the Tucson, Ariz.-based company's vice president of business development.
And with a new majority owner, Los Angeles, Calif-based Leonard Green & Partners (LGP), Garman - who oversees Sun Auto Tire’s merger and acquisition activities - says buy-ups will continue at a brisk clip.
And they won’t be confined to Sun Auto’s traditional domain, the southwestern United States, he adds.
“We’ll move a little bit north - maybe into the Northwest.”
And more acquisitions in the southeastern part of the U.S. - like Hogan & Sons, a seven-location, Virginia-based tire dealership that Sun Auto picked up last month - are possible.
The Hogan & Sons acquisition was Sun Auto’s first East Coast transaction.
The dealership “comes with a great leadership team and we feel we can grow” in the Virginia market over the next few years, says Garman. "We really like the opportunity in that market and we really like the Hogan team.
“We still think there is plenty of opportunity in the Southwest, but where we feel like we can establish a footprint with a good brand and good people and have room to grow - those are opportunities we will not want to pass up. Hogan is a good example of that.”
‘Lots of opportunity’
Founded in 1989, LGP holds more than $50 billion assets and has invested in more than 100 companies, including auto body chain Caliber Collision, which - with the firm’s backing - has evolved into what Sun Auto officials call “the largest provider of collision repair services in the country.”
Garman says “the experience with Caliber and other brands they’ve invested in - which started out like Sun” will prove to be invaluable.
“The expertise to get from where we are today to where we want to be five years from now is an important part of what they bring to the table.”
Tire dealerships are an attractive target for investors, notes Garman.
“We’re in an industry that is very fragmented - even with all the M&A activity going on - with lots of opportunity, particularly in the Southwest, Northwest and some of the other southern states.
“We always like to say we’re a relatively recession-proof industry and that makes us attractive. I think we’re going to see (M&A) activity for the foreseeable future.”
When looking to acquire tire dealerships, Sun Auto considers different criteria, according to Garman.
“And if we’re going into a new market, those requirements may be a little different.”
An attractive footprint, “a solid reputation” among customers and “then obviously, earnings” are pieces of the puzzle.
“If we’re in a market already and are looking to expand our footprint, is (the potential acquisition) complementary to what we’re doing there?
“Ultimately, we’re looking to buy good businesses. We’ve been fortunate to have bought great companies that are full of great people and we do a great job of retaining those people.”
Sun Auto Tire has more than 200 locations and is one of the 10 largest tire store chains on the 2021 MTD 100 list.
